First Time Buyers less reliant on parents for raising deposits - research

New research indicates that the Bank of Mum and Dad may not be as prevalent as it once was, with the percentage of first-time buyers planning to buy with their own savings skyrocketing in the last year by 57 per cent.

In a survey of 1,000 would-be homeowners, 76 per cent said they plan to buy their first home with their own savings. Just 20 per cent expect to receive financial support from their family to help them raise a deposit. 20 per cent of respondents hope to benefit from inheritance. 

Saving a suitable deposit remains one of the biggest challenges many FTBs face. Last year, Moneybox Mortgages customers paid £66,000 on average (mean) on their first home deposit (median deposit; £35k) indicating that even those who may be fortunate enough to benefit from some familial financial support are still having to save significant amounts to make their dream of buying their own home a reality.

However, in the last six months, aspiring homeowners have had to reduce how much they save towards their deposit each month by 18 per cent. In May 2023, FTB hopefuls were saving on average £344 per month. This figure has since decreased to £287 a month, and one-third of respondents have had to save for longer than planned to raise a larger deposit.

Despite persistent cost of living pressures, it is encouraging to see that many have continued to make steady progress towards their home ownership goals. Half of those surveyed feel they are closer to buying a property now than six months ago and 17 per cent were even able to increase the amount they save towards their deposit in the last six months.

Brian Byrnes, Head of Personal Finance at Moneybox - which commissioned the research - comments: “While owning a home is still a top financial goal for most people, it appears that Bank of Mum and Dad could be starting to struggle to support their children’s property ambitions to the same extent as in previous years. 

“As the cost of living puts pressure on household finances the obstacles facing prospective homeowners have only increased in the last year. Affordability and saving a suitable deposit are among the biggest concerns and it is clear that more support is needed to help the next generation of home buyers navigate the changing market conditions.”

Among those surveyed, the most popular savings products used to build a first home deposit were Easy Access Savings Accounts (43 per cent), Cash ISAs (37 per cent) and the Lifetime ISA (17 per cent). 

With interest rates peaking in the last year, many FTBs will have benefitted from higher savings rates to fuel their first home deposit. However, the reliance on easy-access savings accounts is potentially cause for concern as many of these accounts do not keep pace with the competitive rates at the top of the market. 

Additionally, Moneybok contends that many first-time buyers are potentially missing out on free money by not making the most of the right saving vehicles to boost their deposits.

Last year, Moneybox analysis found that Britons eligible for a Lifetime ISA (LISA) - those aged between 18 and 39 years old - could be missing out on up to £18 billion of ‘free money’ each year by not making the most of the 25 per cent government bonus on offer.